July 2008

Volume 17, Number 7

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Comparing Fuel Costs

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One would think comparing the costs of different heating fuels and electric heat sources would be pretty easy. That’s not the case. For starters, while we purchase some fuels by the energy content of the fuel, we purchase others by volume or weight—and we use different units for different fuels. Heating oil, propane, and kerosene are sold by the gallon, natural gas by the hundred cubic feet (ccf) or therm (100,000 Btus), firewood by the cord, wood pellets and coal by the ton, and electricity by the kilowatt-hour (kWh).

To further complicate matters, the amount of usable heat we get from a fuel also depends both on the efficiency of a given heating device and on how efficiently that heat is distributed to the conditioned space. The efficiency of combustion appliances varies widely, from a low of about 40% for older woodstoves to over 95% for condensing gas furnaces. Electric-resistance baseboard heaters are 100% efficient, while heat pumps, which use electricity to move heat from one place to another instead of converting the electricity directly into heat, range in efficiency from 200% to over 300%. (These numbers don’t account for the “upstream” energy costs of fuel production, nor do they begin to account for environmental costs—which are pretty significant with some forms of electricity generation.)

As for distribution efficiency, forced-air heating is often a lot worse than hydronic baseboard heating. If poorly sealed ducts are run through an unheated attic and insulated only to R-4, as is typical in the U.S., the heat-delivery efficiency will likely be only 60%–65%. Multiply that by a standard furnace efficiency of 78%, and you’re getting only about half of the heat you’ve paid for.

Will you save money by switching to another fuel source? If you heat with a standard gas furnace (ducting assumptions as above) and spend $1.65/therm for the natural gas, you’re spending about $33.05 per million Btu (MMBtu) for heat. That’s about the same cost as electric baseboard heat at 11¢/kWh ($32.23/MMBtu), so you’d save money by switching to electric baseboard heating as long as your electricity price is no higher than 11¢/kWh. (You could also improve the cost-effectiveness of gas heating by improving the efficiency of your furnace or heat-distribution system.) Similarly, you could switch from gas to wood pellets and still save money as long as the price of pellets is below $350 per ton (which is significantly higher than today’s going price). These changes don’t factor in the cost of the new heating system.

Lots of fuel cost calculators, including a new one at BuildingGreen.com, perform this kind of analysis. Most compare fuel costs per million Btu (MMBtu) of delivered heat.

Keep in mind that today’s fuel prices are no guarantee of what they will be next year—or next week! Costs of different energy sources rise and fall depending on many factors, including supply and demand. If a lot of people switch to pellet stoves, for example, the cost of those pellets will likely rise.

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June 27, 2008